Should You Avoid Gray Television, Inc. (GTN)?

It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The S&P 500 Index gained 7.6% in the 12 month-period that ended November 21, while less than 49% of its stocks beat the benchmark. In contrast, the 30 most popular mid-cap stocks among the top hedge fund investors tracked by the Insider Monkey team returned 18% over the same period, which provides evidence that these money managers do have great stock picking abilities. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Gray Television, Inc. (NYSE:GTN) .

Gray Television, Inc. (NYSE:GTN) shareholders have witnessed a decrease in hedge fund interest lately. GTN was in 17 hedge funds’ portfolios at the end of September. There were 20 hedge funds in our database with GTN holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Griffon Corporation (NYSE:GFF), Lakeland Financial Corporation (NASDAQ:LKFN), and LHC Group, Inc. (NASDAQ:LHCG) to gather more data points.

We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year, involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs.

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With all of this in mind, we’re going to take a look at the recent action encompassing Gray Television, Inc. (NYSE:GTN).

What have hedge funds been doing with Gray Television, Inc. (NYSE:GTN)?

At Q3’s end, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a decline of 15% from the previous quarter. On the other hand, there were a total of 26 hedge funds with a bullish position in GTN at the beginning of this year. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Citadel Investment Group, led by Ken Griffin, holds the number one position in Gray Television, Inc. (NYSE:GTN). According to regulatory filings, the fund has a $25.2 million position in the stock, comprising less than 0.1% of its 13F portfolio. Coming in second is Whetstone Capital Advisors, led by David Atterbury, holding a $15.5 million position; the fund has 7.3% of its 13F portfolio invested in the stock. Remaining peers with similar optimism encompass Don Morgan’s Brigade Capital, Alexander Mitchell’s Scopus Asset Management and Steve Ketchum’s Sound Point Capital. We should note that two of these hedge funds (Whetstone Capital Advisors and Brigade Capital) are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

We already know that not all hedge funds are bullish on the stock and some hedge funds actually cashed in their positions entirely. At the top of the heap, Eduardo Costa’s Calixto Global Investors cashed in the biggest stake of the “upper crust” of funds followed by Insider Monkey, worth about $26.3 million in stock, and Principal Global Investors’s Columbus Circle Investors was right behind this move, as the fund said goodbye to about $8.3 million worth of shares.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Gray Television, Inc. (NYSE:GTN) but similarly valued. These stocks are Griffon Corporation (NYSE:GFF), Lakeland Financial Corporation (NASDAQ:LKFN), LHC Group, Inc. (NASDAQ:LHCG), and Sonic Automotive Inc (NYSE:SAH). This group of stocks’ market values are similar to GTN’s market value.

As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $61 million. That figure was $87 million in GTN’s case. LHC Group, Inc. (NASDAQ:LHCG) is the most popular stock in this table. On the other hand Lakeland Financial Corporation (NASDAQ:LKFN) is the least popular one with only 8 bullish hedge fund positions. Gray Television, Inc. (NYSE:GTN) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard LHCG might be a better candidate to consider taking a long position in.

Disclosure: none.